The Board Managment Nexus in Corporate Governance

Abstract

The parties involved in corporate governance include the board of directors, the Chief Executive Officer, Management and shareholders. The Board is the focal point of the corporate governance system - it is ultimately accountable and responsible for the performance and affairs of a company. In discharging his duties, a director must act honestly and exercise such degree of skill and diligence as would amount to the reasonable care which an ordinary man might be expected to take in the circumstances of his own business. Boards have to consider weighing the right balance between policing and partnering with management. The aim of corporate governance is to address the inherent conflicts of interest between directors of a corporation and its managers that is, a balance between those who make decisions and those who execute decisions. It is essential that the roles of chairman and chief executive are not exercised by the same individual. The division of responsibilities between the chairman and chief executive should be clearly established, set out in writing and agreed by the board.